Dan Hall: A nation floundering in an ocean of debt

Friday

Sep 26, 2008 at 12:01 AMSep 26, 2008 at 6:19 AM

Like just about everyone else, I am very angry, and very skeptical, about plans to bail out Wall Street.

Dan Hall

Like just about everyone else, I am very angry, and very skeptical, about plans to bail out Wall Street. Do it now or we will face financial Armageddon, President Bush told us. You probably remember when he told us, six years ago, that we had to invade Iraq right now or we would have nuclear Armageddon.

Fool us once, shame on him; fool us twice, shame on us? Maybe not. This could be more like the boy who falsely cried wolf. By the end of the story, the wolf really was at the door.

Still, a Wall Street bailout, as necessary as it may be, treats only the latest symptom of the cancer eating our economy, not the tumor itself.

We Americans like to think that we are the richest and strongest nation on the face of Earth, and that we always will be. In fact, our wealth sits on a foundation of sand.

We are living beyond our means — we consume far more than we produce, and we try to make up the difference with borrowed money. The average American family owes $20,000 in credit card debt, on top of whatever they might owe on their mortgages and home equity loans.

Government borrowing is even worse. Over the past five decades or so, only two presidents have gotten through a single year without adding to the national debt. (Dwight Eisenhower did it once, and Bill Clinton did it three times.)

Last month the Congressional Budget Office announced the deficit for this year will be more than $400 million, double what it was last year. It’s not clear that $400 million even includes all the costs of our wars in Iraq and Afghanistan.

If we add another $700 billion for the bailout, the deficit next year will exceed a trillion dollars. How much is a trillion? Well, one way to look at it is that a trillion barrels of oil would provide enough fuel for the entire world for the next 33 years, at present rates of consumption.

Treasury Secretary Hank Paulson tells us not to worry, Wall Street will pay back the $700 billion when things turn better and traders buy back the bonds. He sure better be right.